4 Can't Miss Elements When Raising Capital Online
Take it from a writer, blank pages are stressful. That’s particularly true when the blank page is for your upcoming capital raise. After all, what you write here can make or break a would-be investor’s decision to support your business.
- Should you tell them the story of how you got started in the first place?
- What about a breakdown of your product or service?
- Will they want to know about your competitors? And how in-depth do you go?
- For that matter, is it best to use technical language or keep things to the surface?
- Which of all these factoids do you share first? And what about visuals?
Clearly, there are a lot of directions you can take your offering page…and just as many pitfalls. While much of what winds up on the page will depend on the specifics of your business, we polled investors and these are the key elements you don’t want to miss.
Methodology
The below results come from a survey of 440 users, who made their first investment on StartEngine in the six months prior to said survey. Why focus on first-time investors, you ask?
Two reasons…
- It’s in the name: equity CROWD-funding. The idea is to appeal to the broadest swath of potential investors possible, not just power-users who are already familiar with StartEngine’s platform.
- First-time users are the future. No, that’s not just a cliché. In 2022 alone, we jumped from 700,000 to over 1 million users on our platform. That’s a 42% growth rate. So what those first-time users think – yeah, it matters.
The Findings
1. Explain your product or service
This one almost goes without saying, but investors overwhelmingly care about what it is you actually do. Over 98% of respondents said a company’s product or service is important to their investment decision.
Before you dismiss this advice as obvious, ask yourself: can a layperson easily understand your product or service? If the answer is no, it’s well-worth your time to workshop your product description until it is.
Pro-tip: a tight 30-second pitch equates to roughly three sentences – aka the target length to explain your business.
2. Provide detailed statistics about your market and company growth
Right behind your product/service, 93% of respondents want to know about the competitive landscape, and 85% of respondents care about your growth and revenue.
The secret here: clarity. Though founders generally provide this kind of data on their offer page, when asked many investors felt the information was missing. Basically, if you bury key details in dense paragraphs, the response you get tends to be “too long; didn’t read.”
3. Yes, investors want to know your story
Mr. Wonderful is fond of asking, “what’s so special about you that you can take this idea and execute on it?”* Turns out, so are investors on StartEngine. Over 78% of respondents said the background of the founding team was important to their investment decision.
This is your opportunity to make an emotional appeal to prospective investors – and turn them into champions of your brand. What was the problem you encountered that motivated you to start your business? And how does your relevant experience uniquely qualify you to tackle it?
You don’t necessarily need your full resume here. But a tight story can go a long way toward demonstrating you have what it takes to go the distance.
4. Where to concentrate your efforts (hint: videos are crucial)
Encapsulating your entire business into an online pitch – that’s a lot of ground to cover. And the truth is, not all investors will read it. In fact, only 36% of respondents said they typically read offering pages in their entirety. So where are they spending their time, and where should you focus your attention?
- Pitch videos: No surprise, in the age of TikTok, 76% of respondents said they watch pitch videos on StartEngine. So it’s worth the investment to produce a quality video. An easy rule of thumb: aim for 2-3 minutes with a mix of b-roll showcasing your product or service, plus interviews with your leadership. Just remember: concision is key.
- The Pitch: These are the 1-2 paragraphs that appear at the top of the page and serve as your first opportunity to pitch investors. 72% of respondents consistently read this section, so take time to make it clear, compelling, and easy to digest.
- Reasons to Invest: These 3-4 bullets occupy prime real-estate on the page. They also offer one of the best changes to present concrete statistics about your business in an easy-to-read format, read by over half of investors.
The Takeaway
There’s a famous saying in sales: don’t make it hard to buy your product. Well, the same goes for equity crowdfunding. Focusing on clarity, concision, and the truly high-impact areas of your offering page makes life easier for prospective investors. While no guarantee, after more than 750 offerings on StartEngine, we’ve found that focus tends to keep said investors on the page longer and – hopefully – nudge them in the right direction.
*Kevin O’Leary is a paid spokesperson for StartEngine. View the details here.
